A new chart from BAC/MER research suggests a technical breakout on the S&P, with an expected move to 2300.
Now long term projections (especially based off technical patterns) always seem to be a little suspect.
Remember when we had the massive double top pattern in 2009 with a projected move to 400 on the S&P? That didn't pan out.
But 2300, given the right timeframe, can be a pretty simple target to hit.
The current YTD returns for the S&P stands around 25%. That's a pretty big move-- certainly assissted by central bank liquidity.
But on average, the S&P returns about 10%, with dividends included.
Let's round down to 8%, and see where that puts us assuming perfect market conditions.
Given a current price of 1795, an 8% return puts us at 1938 in a year.
In 2 years we're at 2093.
By year 4 we're at 2442, which surpasses their target.
Keep in mind, this is assuming normal market conditions. If the Fed continues their voodoo (which I don't agree with and I think will end badly) then returns could be skewed further.
As an options trader, I tend towards more mean reversion than trend. But it's an interesting thought to consider-- given simple average market conditions, what seems like a stretch target is just a run of the mill 4-year market rally.